Violence, occupation and the continuous expansion of Israeli settlements in the West Bank, including East Jerusalem, are taking an increasingly heavy toll on the Palestinian economy and labour market. Palestinian unemployment is up by more than a quarter.

The report calls on all parties not to walk away from the crisis and to continue the search for a two-state solution. The report emphasizes the need to achieve a genuine negotiation process which addresses the interests of all, including Palestinian workers and the businesses that employ them.

ILO Director-General Guy Ryder warns that “the combined weight of the continued occupation and the settlements does not permit the development of a viable, productive Palestinian economy, which could provide sufficient opportunities in terms of decent work. If current trends continue, the scope for such opportunities will shrink further.”

The Director-General underlines that the peace process is in a state of suspension, and the international community should assist the parties directly concerned to resume it.

According to Guy Ryder, suspending the search for a two-state solution could have a “serious and possibly devastating effect on the action to achieve improvements in the employment and livelihoods of Palestinian women and men.” He also says that “the ultimate logic of the institutions and laws that have been, and are being, developed is that they would serve as the infrastructure of a sovereign state.”

The report documents the latest developments in the building up of Palestinian institutions and especially social and labour-related processes for social dialogue, gender equality, social security and vocational education and training. It reiterates that these institutions need to be able to function fully, in practice, so that the stakeholders both benefit from them and also acquire and maintain the practice of using them.

The report warns of a downward spiral, which can be produced by consistently bleak employment and income prospects. It concludes that currently there is a feeling that the space for development of the Palestinian society, and ultimately for a sovereign Palestinian state, continues to diminish. It also states that any new negotiations will immediately face questions of employment and income security as well as social and labour rights of the workers of the occupied Arab territories.

Deteriorating employment prospects

The total number of unemployed Palestinians soared by more than 25 per cent in 2014 compared to the previous year to reach 338,300. This resulted in an average unemployment rate of 27 per cent throughout the occupied Arab territories. The corresponding rate for Gaza was more than double that of the West Bank.

Young jobseekers face an even more serious challenge as the youth unemployment rate reached almost 40 per cent for young men and 63 per cent for young women in 2014. More than 70 per cent of Palestinians are under 30 years of age and they are facing very serious difficulties in finding a job after completing their education.

Palestinian Gross Domestic Product (GDP) in 2014 experienced its first year-on-year decline since 2006. In Gaza, real GDP per capita was nearly 30 per cent lower than in 1999.

Palestinian workers in the Israeli economy

The report notes that a growing number of Palestinians have access to the Israeli labour market, with or without the required permits.

On the Israeli side, both employers and trade unions are ready to receive more Palestinian workers for work in conditions set out in collective bargaining agreements. Over 52,000 Palestinians work legally in Israel, with another estimated 26,000 in the settlements. Some restrictions on the access of Palestinians to the Israeli labour market have recently been relaxed, and this has given a degree of relief in a situation of high and growing Palestinian unemployment.

However, up to a third of the estimated 107,000 Palestinians who work in the Israeli economy, and increasingly in the settlements, do not enjoy the benefits from collective bargaining agreements. They work in unregulated conditions which can be precarious and exploitative. The report notes that due to the large amount of potentially precarious work outside the permit regime, the conditions of recruitment and employment of Palestinian workers should be addressed as a matter of urgency.

Working in Israel should be an option, not a necessity for Palestinians, the report declares.

The findings of the report are based on a mission that involved in-depth discussions and a number of field visits to the occupied Arab territories and Israel in March this year. Since 1980, the Director-General has been mandated to present an annual report to the International Labour Conference on the situation of workers of the occupied Arab territories, including the occupied Syrian Golan.